These breakout stock candidates could have big upside potential.

Recently, the Dow Jones Industrial Average was up over 100 points, or around 1%, and the S&P 500 was up about 14 points, or around 1.1%. The tech-heavy Nasdaq was leading the market with gains of around 1.5%, or a rise of about 39 points.

The calls for a correction by many market pundits are understandable since the market has been doing nothing but trending higher since the lows we hit in late August of 2010. However, just because some investors think the market is due for selloff does not mean that the market will accommodate them. Clearly, the path of least resistance right now is higher, so instead of guessing if the market might correct, it's probably a better strategy to continue to look for stocks that are setting up to go higher.

One way to find stocks that are setting up to trade significantly higher is to search the market for names that are breaking out. Trading breakouts is not a new game on Wall Street. This strategy has been pioneered by legendary traders such as William O'Neal, Stan Weinstein and Nicolas Darvas.

A breakout occurs when a stock makes a move through a significant level of support or resistance, which is usually followed by heavy volume and increased volatility. Wall Street players love to see an upside breakout because it demonstrates strength in the underlying asset as the price breaks above a level of previous resistance. An upside breakout can also take a stock to new highs, which will generate a lot of interest as the stock shows up on sophisticated software that scans for this type of action.